Invoice Financing – Is It For Me?
Invoice Financing: Is It For Me?
At one point or another, every business struggles with cash flow issues. However, businesses that process invoices instead of credit cards feel that struggle more than most others.
If you’re a business owner that depends on invoices, waiting for your customers to pay can have a huge effect on your resources – especially your cash flow. With today’s economy, companies are taking their time to pay invoices and the sting is felt throughout the B2B world.
Fortunately, there are options for the invoice based business. Invoice financing or factoring turns your unpaid invoices into working capital by either selling those invoices or using them as collateral.
Traditional factoring works in the following manner: You sell your businesses invoice and the factoring company gives you roughly 90% of the value of those invoices up front. Your payment to the factoring company is set in either a daily or weekly amount. Once your payment has been collected in full, the factory company gives you the remainder of your money, minus their fees.
A lot of businesses find that this situation is not ideal, however immediate access to working capital gives your business the ability to pay employees, market, purchase new equipment, expand, or whatever else you need to function.
The bottom line is that invoice financing is a pretty simple concept in that it’s a way for businesses to obtain working capital and even out their cash flow. The agreement with the factoring company doesn’t have to be complicated. Find a funding company who is willing to work with you on the term and the rates.
Our sister company, Choice Funding, offers a few different options for both invoice factoring and business loans. With 5 years in the business and over $60 million funded, they have been finding the right solutions for small businesses throughout the United States.